Assessing Corporate Governance of Ethiopian Private Limited Companies: With Particular Emphasis on Making Board of Directors Compulsory to Such Companies.
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Date
2014-04
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Addis Ababa University
Abstract
In Ethiopia, Private limited companies have increased in number, size and complexity and they require more complex organizational structures and a more diverse workforce possessing various levels and areas of expertise. In light of internationally recognized best practices and principles of corporate governance and based on the available data and literature, this paper attempts to show the deficiency of the Commercial Code in addressing current issues in corporate governance of private limited companies related to absence board of directors in the governance structure, conditional ordinance of shareholders meeting and auditors appointing, the minimum two person mandatory requirement for the formation of such companies and issues regarding conflict of interest. The sketchy nature of the provisions of the Commercial Code that govern private limited companies and lack of reference to share companies’ provisions worsen those problems.
Accordingly, the paper provides crucial recommendations based on internationally recognized principles and practices of corporate governance of private limited companies as they are expected to address the basic governance problems of Ethiopian private limited companies. The writer recommends that it is essential to formulate the contemporary corporate governance rules to the private limited companies in Ethiopia particularly making board of directors compulsory to the governance of such companies. Making private limited companies to have a governance board that should have an appropriate mix of knowledge, skills and experience is very vital to make private limited companies effective and value add to the country‘s growth.
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Assessing Corporate Governance of Ethiopian